1982 (2) TMI 120 - AT - Income Tax

Summary

Issues:
- Appeal against the order of the 1d. ITO withdrawing interest under s. 244(1A) by rectification under s. 154.
- Applicability of s. 154 in the absence of an apparent mistake.
- Validity of the AAC's decision upholding the ITO's order.

Analysis:

1. The appeal was filed by the assessee challenging the decision of the 1d. ITO to withdraw interest amounting to Rs. 1,380 under s. 244(1A) through rectification under s. 154. The grounds raised included errors in law and facts, arguing the arbitrariness and unjustifiability of the withdrawal of interest.

2. The facts revealed that the assessee's return was initially accepted under s. 143(1), and tax was deposited under s. 140A based on the returned income. Subsequently, due to a reduction in share income from a firm following an appeal, the ITO granted interest under s. 244(1A) to the assessee, which was the subject of contention.

3. Despite the assessee's submission that the interest was rightfully allowed and the issue was debatable, the AAC upheld the ITO's decision. The assessee's argument that the interest payment was appropriate and not free from debate was reiterated during the appeal.

4. The 1d. Counsel for the assessee maintained that the interest payment was in order and not subject to debate, opposing the ITO's withdrawal of the interest through rectification proceedings under s. 154.

5. The 1d. Deptl. Rep. supported the lower authorities' orders, contending that the error in granting interest was clerical rather than interpretational, as it was a mistake made by a clerk. The Deptl. Rep. argued that the AAC's decision should be upheld.

6. Upon considering the submissions, the Tribunal rejected the Deptl. Rep.'s contentions, emphasizing that the issue of interest grant under s. 244(1A) was debatable and not a mere clerical error. Referring to legal precedent, the Tribunal concluded that the interest grant could not be rectified under s. 154, ultimately reversing the AAC's decision.

7. Consequently, the appeal was allowed in favor of the assessee, overturning the decision of the lower authorities and reinstating the interest amounting to Rs. 1,380.